We Are Often Prone to Make Judgments on the Extent

question 38

Multiple Choice

We are often prone to make judgments on the extent to which the things we observe match our expectations of what we think things should be like while ignoring the mathematical probabilities of their occurrence. This error is known as the

• A)availability heuristic
• B)representativeness heuristic
• C)confirmation bias
• D)stereotypic bias

---

Definitions:

Dividend Yield Ratio

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Dividend Payout Ratio

A financial ratio that measures the percentage of a company's net income that is distributed to shareholders as dividends.

Dividends Per Share

The dividend amount that a company pays out to its shareholders for each share owned.

Trend Percentages

Several years of financial data expressed as a percentage of performance in a base year.